March 18, 2008

Shrinking military spending an opportunity for mobile vendors?

What I am about to write is based on assumptions and conjecture. It has to do with military procurement. And more specifically, military procurement of rugged mobile technology.

We've all heard about the proverbial $600 toilet seats and other supposed gross waste of resources. We also somehow assume that the military has ultra-advanced equipment and secret weapons that are more sophisticated than anything we can think of. In the same respect, having served in the military, I know that the armed services often use equipment that, by civilian and commercial standards, is completely and utterly obsolete. So what is true? That the military has incredible gee-whiz weaponry and gadgets, or is it all tried-and-true (and rather old) stuff?

Most likely some of both. When you peruse the product lineups of some of the defense contractors you see some shockingly obsolete stuff in there. Machinery powered by ancient Pentium chips, murky LCDs, a complete lack of modern interfaces and so on. Heck, our fighter planes are positively ancient if you applied the standards of, say, the automotive industry. Sure, they are said to be equipped with the latest computer gadgetry, but still, how up-to-date can decades-old designs be?

Anyway, I really want to talk about how all of this relates to the cost of rugged mobile equipment. In a recent summary report, Venture Development Corporation (VDC) reported that military spending on expensive rugged mobile technology may dry up in coming years. They also stated that this will leave an interesting opening for a new class of "good-enough" hardware that can fill most requirements, or all, at a considerably lower price. What this means is that the military may stop paying premium prices for traditional military market equipment from traditional military market vendors. So instead of simply ordering a successor model from an established (and presumably expensive) vendor, they may look around for less costly alternatives.

This indeed may present an interesting opening for some companies that have not traditionally dealt with the military market. It also means that such companies will have to take a crash course in how to deal with the military, learn more about requirements and certifications, and about service and sales cycles. Truth be told, we've seen a good number of "civilian" rugged handhelds that we believe could serve the military quite well whereas some of the traditional gear makes us wonder about its usefulness.

So are some vendors just a small learning curve and a few modifications away from being serious contenders for armed forces contracts? Or is dealing with the governments simply too cumbersome to even attempt for anyone other than the handful of defense contractors?

Costs, of course, are relative. Given that a very simple ankle fracture without any complications or anything cost a friend of mine the appalling amount of $28,000 five years ago, I can only imagine what the military's health care cost must be. Perhaps, compared to that, it simply doesn't matter whether a handheld costs $1,500 or $5,000.